Selling hope, delivering harm

The Consumer Financial Protection Bureau’s (CFPB’s) new Qualified Mortgage rule exempted Federal Housing Administration (FHA) underwriting standards until 2021. The subsidies and exemptions FHA-insured loans enjoy generally qualify them for the CFPB’s designation as “prime loans.” Yet, an FHA 30-year fixed-rate loan with 4 percent down, a 43 percent total debt ratio, and a 580–599 FICO has an expected foreclosure rate of 28 percent. The CFPB calls these loans prime, but if it performs like subprime, it is. This lending standard is having a disproportionate impact on low-income and minority families.